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Spring 2009 Chicago Booth Magazine 5 min with Pete Peterson
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Chicago Booth Magazine Spring 2OO920
Five Minutes With Pete Peterson, ’51
What made you launch the foundation?
I had a windfall from Blackstone going
public, and suddenly I was confronted
with the possibility that I would be
an instant billionaire. I thought I cer-
tainly already had more than enough
money. I’m 82. My Greek immigrant
father, who donated a lot to good
causes here and in Greece, said giving
not only makes the recipient happy, it
can also make the giver happy. I was
in the final stages of retiring from
Blackstone after 24 years and I had just
retired from the Council on Foreign
Relations, where I’d been chairman for
22 years. The transition from having a
rather hectic life to having little to do I
found almost depressing. I decided to
commit $1 billion to create a founda-
tion to deal with the issues I’ve been
railing about for 25 years—long-term
fiscal and economic challenges facing
the United States. And I call them
undeniable, unsustainable, but politi-
cally untouchable. I decided there was
room for a foundation—different
from certain other think tanks—that
would focus on the long-term, and
focus on trying to do something about
these problems.
What are the first projects you funded,
and what do you hope they achieve?
The first big project was funding
a movie called I.O.U.S.A., which
explains the melancholy fiscal future.
It ran in about 400 theaters. CNN ran
a shorter version. Now we’re doing it
in even smaller bits for YouTube. We
have a major number of efforts aimed
at young people because they’re
largely uninvolved, yet it’s their future
that’s imperiled. We’re steadily in-
creasing our online presence through
sites like YouTube, MySpace, Face-
book and Twitter. We’ve given money
to mtvU, which partnered with us
to create the InDebtEd campaign
aimed at college students. InDebtEd
has a great website and is currently
developing a video game centered on
personal financial responsibility.
We are working with the Commit-
tee for Economic Development to
Launching a Foundation
After a career that ranged from serving as Richard Nixon’s Commerce Secretary to launching private equity
giant The Blackstone Group, Pete Peterson, ’51, pledged $1 billion last year to form the Peter G. Peterson
Foundation to spur public action on long-term economic problems in the United States. Its first major initia-
tive was a documentary called I.O.U.S.A., which debuted at Sundance and was later nominated for a Critics’
Choice Award. He recently spoke with Chicago Booth Magazine about the financial crisis, YouTube, and what
MBAs can do to help the economy. Interviewed by Patricia Houlihan
Get
ty I
mag
es
Doing Well, Doing Good: Pete Peterson, ’51, has
launched a foundation to address “undeniable,
unsustainable, but politically untouchable” long-
term fiscal and economic challenges facing the
United States.
21Spring 2OO9 Chicago Booth Magazine
energize business leaders. If we don’t
do anything about these long-term
challenges—Social Security and
Medicare, current account and sav-
ings deficits, foreign lending that may
soon reach dangerous levels, along
with health care costs that are out
of control—and try to borrow those
extraordinary amounts or to tax our
way out of them, it’ll have a major
negating macro effect on the econo-
my. And, shorter term of course, the
unprecedented trillions of dollars of
additional budget deficits in the vari-
ous stimulus and bailout effort simply
add to my concerns.
What do you think it will take for
individuals to change? Or politicians?
What makes a difference?
We’re doing something that I
understand is quite rare in founda-
tions—getting involved in citizen
engagement and awareness. We’ve
run double-page ads in the New York
Times and major ads in the Washing-
ton DC–area. We’ve run TV commer-
cials. We have to inform the public
because they have been anesthetized
by a political process that does not
want to tell them the hard truths. For
example, Washington has concocted
something called Social Security
Trust Funds that I call an oxymoron;
they shouldn’t be trusted and they’re
not funded. The money’s already been
spent and there’s nothing in them but
liabilities. The public does not know
that. We don’t think young people
understand their payroll taxes would
have to double to cover the current
promises that have been made. In my
opinion, that is unthinkable.
Once people are educated, they also
have to be motivated to act. There are
huge special interest groups urging
politicians to pay out more benefits
with more programs. We now have a
political system where, unlike what the
founders of the country had in mind,
politicians consider the position a
career and don’t want to lose their jobs.
If they peddle the hard truths, they
fear they’ll lose elections and lose their
jobs. Their focus is not on the next
generation, it’s on the next election.
We want to build a movement of
young people. I realize it’s a fantasy,
but I’d love to see 50,000 to 100,000
young people and their parents in
Washington shouting, “I’m madder
than hell, and I’m not going to take it
anymore.” In other words, it ultimately
has to get expressed in Washington,
and we understand that. But first there
has to be increased awareness.
Do you think there is something that the
business community—including MBAs
from Chicago Booth—can do?
Business can be a huge force in
Washington when it gets focused and
energized. It just has not been focused
on these longer term issues. If the
business community were to decide
these long-term challenges were dan-
gerous to our economic health and
to the health of their businesses, they
could be a much bigger force than
they are now. Tom Friedman calls
us MIAs, missing in action, on these
longer term issues.
I think most executives know these
long-term issues are unsustainable
and undeniable, but many are preoc-
cupied with running far more global,
competitive businesses, and they
probably feel they don’t have the time
to get involved in what may turn out
to be controversial crusades that deal
with these longer range issues.
Which of the professors you had at
Chicago still stand out in your mind?
Milton Friedman, George Stigler, James
Lorie, and John Jeuck. I visited Milton
before I accepted the job in the Nixon
administration as assistant to the
president for international economic
affairs and asked if I should take the
job. He said, “Absolutely not. With
floating exchange rates, the job is
unnecessary. And without them it’s
impossible. A young man your age
shouldn’t be taking a job that’s either
unnecessary or impossible.”
George Stigler used to say, “If you
have no alternative, you have no
problem.” Remembering that, however
daunting these long-term fiscal chal-
lenges, I decided I had no alternative
but to try to do something about
these problems. It’s amazing how
that Stigler principle has stuck with
me in life. n
“ Once people are educated, they have to be motivated to act.” —Pete Peterson, ’51